Energy companies face ‘crunch time’ for accounting compliance

In a new report, entitled “Crunch-time – embedding International Financial Reporting Standards in energy and utilities”, the accounting company said the sector is facing its biggest accounting shake-up in 25 years, and called for chief financial officers to plan to imbed IFRS across their organisations.

The new rules will affect all EU-listed companies that will need to produce comparative figures in 2004. Under IFRS, financial information will be directly comparable between companies in all EU countries, and this is expected to improve the transparency of reporting and boost investor confidence.

Manfred Wiegand, global utilities leader at PwC in London, says adopting IFRS is a bigger challenge than most businesses think. “Conversion is a tough proposition. It demands in-depth knowledge of the industry, a thorough understanding of IFRS and its implications for the business and change-management expertise,” said Wiegand. He added that it is not unusual for costs to run to several millions of euros for a single large company.

Wiegand believes that while most companies recognise conversion to IFRS can have an impact on their reported profits or net assets, they may not realise the substantial effect it may have on the whole organisation.

“The change to IFRS is expected to trigger larger swings in reported profits, reflecting fluctuations in derivatives values. Lack of awareness and understanding across the broader financial community could create investor concern and share price volatility,” he added.

• Tweet  
• Facebook  
• LinkedIn  
• Save this article
• Send to  
• Print this page  

• Topics
• PwC
• Foreign exchange